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What is coinsurance? 2022 guide

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Read time
9 mins

Did you know you might still owe money even after you meet your deductible? That's something that not everyone realizes when they sign up for a health plan.

You may still owe a specific coinsurance amount even after you reach your deductible, as outlined by your health plan. Let's discuss the very basics of coinsurance and how it works.

What does coinsurance mean?

Coinsurance means you pay your share of the costs of a health care service. Coinsurance refers to the amount you must pay for covered health care after the deductible is satisfied. (Your deductible refers to the amount you pay for covered health care services before your insurance plan kicks in and begins to pay.)

Coinsurance generally looks like a fixed percentage, or a percentage of the total cost of care, usually 20% or 30%. You might think of your coinsurance as similar to your copayment, or copay. However, copays require you to pay a set dollar amount at the time of the health service, unlike coinsurance.

Coinsurance goes toward your annual out-of-pocket maximum. Your health insurance company can't require you to pay more than your yearly out-of-pocket maximum cost (which includes the deductible, copays, and coinsurance) each year.

Health care plans with low monthly premiums usually carry higher coinsurance, and in general, plans with higher monthly premiums carry lower coinsurance.

How does coinsurance work?

Here's how coinsurance works in a nutshell: Let's say you paid for your health care expenses and met your deductible. Then, when you go to the doctor, you don't pay all the costs involved. Instead, you and your plan share the cost.

For example, let's say your coinsurance is 30% and your health plan's allowed amount for an office visit totals $100. If you've already paid your deductible, you pay 30% of $100, or $30, and the insurance company pays the rest. If you haven't met your deductible, you pay the full amount, or $100.

Coinsurance vs. copay

A copay is a flat fee that you, the policyholder, pay for a health care service. You may pay your copay before or after you've reached your annual deductible. The copay allows you and your insurer to share the costs of health care. Your insurer determines your copay amount in advance.

Coinsurance vs. deductible

A deductible is the amount of money you, the policyholder, must pay for health care services before the benefits of your health insurance plan kick in. Some have higher deductibles in exchange for lower monthly premiums. These are called high-deductible health plans (HDHPs) can be financially beneficial for younger, healthier individuals who don't require a great deal of health care services.

Example of copay vs. coinsurance vs. deductible

Let’s take a look at how copays, coinsurance, and deductibles work together.

Say you fell off a ladder in your garage and you stopped your fall with your hands, injuring your wrist.

  • You pay your primary care copay of $30 before you see your primary care physician.
  • Your doctor decides you need an X-ray, which costs $1,000.
  • Let's say your insurance deductible is $500 and your coinsurance responsibility is 30%.
  • You'd need to pay the $500 for the deductible portion and you’d also be on the hook for the remaining 30%. Your health plan would pay for the other 70%.
  • In this case, you’d pay $800 for the X-ray, plus you'd also need to pay the $30 copay.

What if you can't pay your coinsurance?

What should you do if you can't afford your insurance payments?

You may want to get supplemental insurance, which covers costs above and beyond standard health insurance policies. You may use it to pay out-of-pocket expenses that can occur through serious injuries or illnesses. You can use it to pay for a variety of items related to your illness or injury, including lost wages, transportation, or medication. You may want to look into these specific types of supplemental health insurance:

  • Critical illness insurance is a type of supplemental plan that pays a lump sum cash benefit to the policyholder if he or she is diagnosed with a covered illness. What is considered a covered illness will vary from insurance company to insurance company. For example, critical illness insurance policies offered through Breeze pay up to $75,000 in benefits for 11 covered diagnoses: invasive cancer, non-invasive cancer, heart attack*, stroke, coma, paralysis, angioplasty, major organ transplant, Advanced Alzheimer's Disease, coronary (artery) bypass surgery, and kidney (renal) failure.
  • Disability insurance is protection for your greatest asset — your ability to earn an income. If you become too sick or hurt to work, your disability insurance policy will help you replace a percentage of your income while you recover. Benefits kick in after the policy's elimination period (also called the waiting period) and last a set number of years or even up to retirement age. The money received can be used to pay the bills, provide for your family, literally anything you would use a normal paycheck for.
  • Accident insurance can give you a lump-sum cash benefit in the event of an accident related to burns, fractures, deep cuts, ambulance costs, emergency treatment, and ongoing care related to the accident.
  • Hospital insurance can be used to help pay for deductibles, prescriptions, and other costs with hospital visits.

Americans over 65 and those with disabilities can tap into a Medicare Supplement plan (also called Medigap) as well. Medigap helps pay for copays, coinsurance, and deductibles. Some plans even cover medical care when you travel overseas.

You may also want to consider a few other options if you can't make your payments:

  • Use emergency savings. If you have a stash of money saved up, this can offer a great approach to paying your bills. Experts recommend having at least six months' worth of money saved in your emergency fund.
  • Negotiate a payment plan. Your health care provider may allow you to pay your bills over time. Check with your hospital billing department so you understand your options. You may be able to set up a monthly payment plan that will help lessen the immediate financial impact.
  • Look for cheaper health care options. You may want to switch to a cheaper health care plan. A lower deductible may change the game for you, though you may pay more in health care premiums. Some clinics will charge you based on your income, so you can also look into alternative health care options as well.
  • Check into employee assistance charity programs. Often, companies allow their current employees to help other employees pay for one-time financial hardships by deducting money from their paychecks throughout the year. If you face financial hardship due to health care, check with your human resources or employee benefits office to find out how you can access charity to help pay your bills. Then, once you get back on your feet, turn around and donate each month out of your paycheck to others in need.

Always remember this about coinsurance

Remember that since coinsurance makes up a percentage of the total cost of medical services, the amount you'll pay for coinsurance changes with each type of health care service you get. Coinsurance will rise and fall, depending on whether your service costs a small or large amount of money.

Also remember that once you hit your out-of-pocket maximum for the year, you don't have to pay any more coinsurance as long as you follow the rules set by your health insurance plan.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

*Heart attack does not include established (old) myocardial infarction occurring prior to the issue date, sudden cardiac arrest, cardiac arrest or cardiopulmonary arrest.

NOT AVAILABLE IN NEW YORK. CRITICAL ILLNESS INSURANCE PROVIDES LIMITED BENEFIT COVERAGE. It is not a comprehensive major medical plan or Medicare supplement policy and does not satisfy the requirement for minimum essential coverage under the Affordable Care Act (ACA). The description of benefits is intended only to highlight the insured’s benefits and should not be relied upon to fully determine coverage. If this description conflicts in any way with the terms of the policy, the terms of the policy prevail. This policy may contain reductions of benefits, limitations and exclusions. Availability of this product, final underwriting requirements, benefits and cost will depend on your application.

Policy Form No. I H1820 underwritten by Assurity Life Insurance Company, Lincoln, NE. Assurity is a marketing name for the mutual holding company Assurity Group, Inc. and its subsidiaries. Those subsidiaries include but are not limited to: Assurity Life Insurance Company and Assurity Life Insurance Company of New York. Insurance products and services are offered by Assurity Life Insurance Company in all states except New York. In New York, insurance products and services are offered by Assurity Life Insurance Company of New York, Albany, NY. Product availability, features and rates may vary by state.

— Published May 30, 2021
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